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The following information relates to the Tram Company for the upcoming year.
Amount Per UnitSales $4,000,000 $10.00Cost of Goods Sold 3,200,000 8.00Gross Margin 800,000 2.00Operating Expense 300,000 .75Operating Profits $500,000 $1.25
The cost of goods sold includes $1,200,000 of fixed manufacturing overhead; the operating expenses include $100,000 of fixed marketing expenses. A special order offering to buy 50,000 units for $7.50 per unit has been made to Tram. Fortunately, there will be no additional operating expenses associated with the order and Tram has sufficient capacity to handle the order. How much will operate profits be increased if Tram accepts the special order?
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Managers need to know enough about accounting concepts and their applications, that they can understand and interpret financial data and make the best decisions possible.
The balance of an unearned revenue account:a.Appears in the balance sheet as a component of owners' equity.b.Appears in the income statement along with other revenue accounts.
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